Aker Philadelphia-Crowley tanker deal driven by US shale boom

Houston (Platts)--9 Aug 2013 412 pm EDT/2012 GMT

The joint venture tanker deal between Oslo-listed Aker Philadelphia Shipyard and Crowley Maritime, announced earlier Friday, is being driven by the boom in transportation demand created by the US shale bonanza, the partners indicated.

The deal calls for Aker to build four tankers that would be jointly owned with Crowley. The four would cost $500 million and be delivered in 2015 and 2016, Aker said in a statement (See story, 1008 GMT).

An additional four tankers could be built, for a total of eight, with delivery through 2017.

"The shale revolution is creating industrial opportunities throughout the United States," Aker Philadelphia CEO Kristian Rokke said in the statement. "This strategic opportunity allows us to capitalize on the increased demand for Jones Act tankers."

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The Aker-Crowley vessels would be Jones Act tankers, which under US maritime law requires ships going between two US ports to be manned by US nationals, owned by a US group and built in a US shipyard. Those tankers are enjoying a boom in demand servicing US shale oil plays, which in turn has strained available tonnage and sharply increased freight rates as production outpaces pipeline capacity.

The tankers in the Aker-Crowley deal will be capable of carrying crude or refined products. A number of tankers that traditionally carried products have been pressed into service hauling shale oil, creating knock-on demand for product carriers.

"The demand for tankers has increased significantly" in connection with booming production from US shale plays, Aker spokeswoman Kelly Whitaker said.

Aker, whose shipyard is located in Philadelphia, said in its statement the two companies were expanding cooperation initiated with the sale and delivery of two product tankers in 2012 and 2013. Crowley is the largest independent operator of petroleum barges and tankers in the US.

The tankers in the deal would each have a capacity of 330,000 barrels and be designed to transport oil mainly between US coastal points, Crowley's Miller said.

Consistent with the requirements of the Jones Act, Crowley would maintain control over the ownership, technical operation, and commercial management of the vessels, Aker said. The Norwegian group and Crowley would share in the financial proceeds of the operation and chartering of the new vessels.

Aker said it expected to invest about $115 million in the first four vessels through a combination of existing shipyard equity and new debt. Funding is expected to be met without any equity capital issuance.

Design and procurement activities are already under way to support the start of construction of the first tanker in January.